When It’s Time for a Portfolio Loan

Nov 7
Category | Blog

What is a portfolio loan? A portfolio loan is one where the lender keeps the loan in its “portfolio” and does not sell the loan in the secondary market. Okay, so what is the secondary market? The secondary market as it relates to the mortgage industry ensures liquidity in the mortgage market where lenders can buy and sell home loans. This liquidity is so very important in the industry because without it, lending activity would shrink and rates would rise.

The most common loans bought and sold in the secondary market are those that adhere to standards set by Fannie Mae and Freddie Mac. Each entity issues its own guidelines and as long as a loan is approved using those standards, the issuing lender can sell that loan to Fannie or Freddie or even to other lenders. When financing a loan the lender taps into its credit line, funds the loan and then sells it. Doing so replenishes the line of credit, allowing the lender to make still more mortgages. Nearly two out of every three mortgages issued today are either Fannie or Freddie.

But there are plenty of other scenarios that do not follow these guidelines. Borrowers can still have good credit and a down payment but for whatever reason can’t qualify for a traditional mortgage. For example, a standard requirement for a conventional loan is having two years in the workforce. The borrowers might be an excellent credit risk but may not yet have reached the two year minimum. A portfolio loan however can approve the application in this scenario with say just one year of employment.

Another scenario relates to income. Fannie and Freddie guidelines ask for two years of employment and ...

In addition to the price of your home, closing costs are the extra fees and expenses you might have to pay during the closing process. This can range anywhere between 2-4% of the purchase price of the new home you are looking at. It is important to know this before you go out with a real estate agent on tours of different homes so you understand what you will be asked to bring to the table. You can prepare for these closing costs by simply setting up a meeting with the lender you choose and they will give you a run-down of how much you could be qualified to borrow based on all your financials. Another good idea would be to start putting away as much money as possible and as early as possible to prepare yourself for the down payment on the house and any other unexpected fees and expenses that may come up. Here are some of the most common closing costs you will probably run into during the closing process:

  1. Home Inspection: This is super important and a major component of the process since a home inspector will come and provide a detailed report of all the good and bad things in and around the home. When finding a home inspector, it is also crucial that the person you hire is one who is reliable and does not let things slide. They should be looking for foundation issues, any damaged pipes, any roof problems and other major issues that can cause problems in the future.
  2. Attorney Fees: Getting an attorney to help with closing the deal is NOT mandatory, but is suggested during the process. If you do ...

Finding a new home to buy can be very exciting! However, there are some precautions you should be making when applying for a mortgage. To make the process less stressful, we mapped out some key things to avoid to ensure that the process runs as smoothly as possible. Always consult with your loan officer before making any significant changes that could affect your credit and possibly change your original qualifications. Here are seven different highly-suggested changes that you should avoid:

  1. Refrain from any changes to your annual income. Consult with your loan officer since they need to be able to track the source and amount of your income.
  2. Try to keep away from depositing cash into your accounts. The lenders you work with also need to source your money through an efficient and effective way. Consult with your lender to figure out the proper way to do this considering that cash is hard to trace.
  3. Steer clear from ANY large purchases. It can get very exciting buying new furniture and other decorations for your new home, but all of it adds up very quickly. This new debt, on top of your new monthly payments and obligations, can result in high debt-to-income ratios. High ratios mean riskier loans. If you were once previously qualified, you may no longer qualify due to the ratio difference.
  4. Do not co-sign any other loans. Co-signing for other people means you will be obligated even if you are not the one making the payments.

7 Tips For Building Home Equity

Sep 17
Category | Blog

Are you wondering how you can build home equity? Take a look at our 7 tips for doing so…

  1. When Home Prices Rise
    This is an easy one. When home prices climb, you’re obviously gaining more equity because your property will now be worth more money.
  2. Reduce Your Mortgage Balance
    Every time you make a mortgage payment you’re gaining more home equity. Every month, as you pay it off, you’re also paying off some interest and principal, which helps as well.
  3. Larger or Bi-Weekly Mortgage Payments
    The larger or more frequent payment you make each month will help you pay off your mortgage and gain home equity at a much faster rate. If you increase the amount you’re paying per month, a portion of that will go towards the principal and help you pay off the mortgage quicker. You also have the option of doing a bi-weekly mortgage payment plan, which includes making 26 half payments during the year. In return, it shaves down your mortgage term, helps you to save interest, and builds you home equity faster.
  4. Shorter Mortgage Term
    Maybe you started with a 30-year-fixed mortgage, but now feel like you can pay off your home at a faster rate. If so, you have the option of refinancing into a shorter-term mortgage with a lower mortgage rate like a 15-year-fixed. It will in fact increase your payment amount, ...

Why You SHOULDN’T Close a Credit Card

Sep 3
Category | Blog

A good credit score is crucial during the mortgage process, as it usually helps you to get better interest rates and terms, as well as lower fees on your home mortgage loan. Another reason a solid credit score is important is because it’s a direct reflection of your ability to pay, and it informs the lender if there is any possible risk when lending to you.

Curious how your credit score is determined? The credit bureaus determine your credit score based on five different factors. These factors include…

  1. Payment History – Are you making your payments on time, or do you have late/missed payments?
  2. Length of Credit – How long have you had your accounts and how often are you using them?
  3. Amount Owed – How many total accounts do you have, and how much do you owe on each one?
  4. New Credit – Have you opened any new accounts recently?
  5. Types of Credit – Do you have any debt? This could include credit cards, student loans, auto loans, and more.

So, are there any consequences to closing a credit card? The answer is YES.

If you close a credit card account, you lose the payment history from it that shows lenders your ability to pay. If you make your payments on time, and that history is a positive thing, you’ve now taken that away from lenders to look at, which can impact your overall credit ...

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